Speaker: Xiangdong Qin

Topic: Rules as Reference Points in Organizations: an Experiment

Abstract: 

Rules in organizations may be rigid or flexible. Flexible rules allowing more discretion for agents may bring about more benefits ex post or more investment ex ant. Rigid rules could improve ex-post efficiencies by reducing shading cost. This paper verifies the theoretical model of elastic rules and rigid rules in organizations through experiments. In the experiment, there are two kinds of four person groups and six person groups, each of which has a principal and an agent. There are two kinds of projects in the experiment, namely fixed income projects and risky projects with high average income. The experimental results show that the agents in the six person group have greater discounts to the principal and other agents in the same group, and the principals in the six person group tend to choose the rigid rule that requires the agent to choose only fixed income items.

Location:  via Zoom; Room 318

Meeting Time: Nov. 30rd, 2022, 21:15pm CST; Nov. 23rd, 2021, 8:15am EST